Lux Investing

What is the best strategy for investing on little money?

I don't have a lot of money to invest (under $500) is it worth my while to get into stocks or should I do something else with it?

Public Comments

1. A mutual fund could be a safe choice; there are some you can purchase for a $250 initial amount.
2. I just wanted to tell you to be really careful of getting spam answers. These people will want to take your $500 from you, so don't follow any links. That being said, it depends on your risk tolerance. Are you willing to go into stocks or do you want to play it "safer"? Remember, the stock market does have a better earning potential, so it's up to you.
3. Before you start investing, though you need to have an emergency fund of at least $1,000 and it should be as much as 3 to 6 months expenses. If you don't have that I urge you to put your money in a money market account at your local bank and use it to start your emergency fund. That way when the water heat stops heating or the car breaks down you won't have to rely on credit cards. .If you already have the emergency fund then a mutal fund would be the best route to go for your investment. Find one from a family of funds you know and one that has low fees and expenses like Fidelity or Vanguard. Start with a market index fund such as Vanguard's total market index fund. Start now and you will be amazed at how the small amount you have will grow.
4. That depends on how far into the future you may need the money. Also, how easily do you have to be able to get at the money? If it is only $500, and you don't already have money put aside for emergencies, then you are better off putting it into a high yield savings account, or money market account. These pay about 5% interest now. Once the money is there, add to it whenever you can. When you have about $2000 in this account, then you can start thinking about other investments. It is always good to have emergency money in an account before you invest further.